Why capacity planning matters more for job shops
A job shop runs many low-volume, high-mix orders through shared resources. Unlike a mass-production line where the cycle time is fixed and the volume is fixed, a job shop sees different parts on the same machine every day, each with its own setup time, cycle time, and routing. The result is that capacity is not a fixed number - it depends on the mix.
For make-to-order manufacturers (those who do not build to stock), capacity planning also gates customer promises. If your sales team commits a delivery date that your capacity cannot support, you will deliver late and the customer's MRP will absorb a hit. Capacity planning is the link between order intake and shipping promises.
Three planning horizons
Capacity planning operates at three time horizons, each with different precision and purpose:
- Strategic (12-36 months): Do we need a new VMC? Should we add a second shift? Should we sub-contract more? Resolution: machine-group level.
- Tactical (1-6 months): RCCP - rough-cut capacity planning. Match the next quarter's expected order book against current resources at machine-group level. Resolution: machine group + week.
- Operational (1-4 weeks): Finite-capacity scheduling. Sequence specific work orders on specific machines at specific times. Resolution: machine + hour.
How to calculate available capacity
For each resource (machine, cell, or operator), compute:
Available capacity = Calendar hours × Shifts × Days × Efficiency
Where Efficiency accounts for everything that depresses capacity below the rated maximum. Realistic Indian factory efficiency factors:
- Planned downtime (PM, lunch breaks, shift changes): 8-12% reduction.
- Unplanned downtime (breakdowns): 5-15% reduction depending on machine age and PM discipline.
- Setup and changeover: 5-20% reduction depending on product mix variability.
- Quality losses (rework + scrap): 3-10% reduction.
How to calculate required capacity
For each work order, required capacity at a resource = (Setup time × Number of changeovers) + (Cycle time × Quantity). Multiply across all work orders in the planning period and aggregate per resource.
The trap: setup time. Setup is invariant per changeover but proportional to the number of distinct part numbers in the plan. If your plan has 20 part numbers running on a single VMC, you have 20 setup-time hits, not 1. Mixed-model plans where parts repeat are higher capacity than one-off plans.
RCCP: rough-cut capacity planning at the quarterly horizon
RCCP compares the planned production schedule against capacity at the major-resource level (work cell or critical machine), to identify where the schedule is infeasible. It uses standard load profiles per part - approximate hours per piece at each work centre - rather than detailed routings.
RCCP outputs:
- Load on each major resource for each week of the next 12 weeks.
- Identification of weeks where load exceeds capacity (overload).
- Identification of weeks where load is below capacity (underload).
- Trigger for: customer-commit revision, sub-contracting decision, additional shift, machine procurement.
Finite-capacity scheduling at the operational horizon
Finite-capacity scheduling assigns specific work orders to specific machines at specific times, respecting the actual operations and constraints. It is the level of detail a shop-floor supervisor uses to dispatch work.
Finite scheduling has to handle:
- Sequence-dependent setup time (changing from a brass part to a steel part needs longer setup than steel-to-steel).
- Operator-skill matching (not every operator can run every machine).
- Tool availability (single-set tooling may bottleneck multiple machines).
- Customer priority overrides (Maruti's blanket schedule beats everyone else).
- Multi-operation routing (an operation can only start after the previous operation on a different machine is complete).
Bottleneck analysis
Goldratt's Theory of Constraints says a system's output is limited by its bottleneck resource. In a job shop, the bottleneck is rarely the same week-to-week - it shifts with the mix.
To find your weekly bottleneck:
- Compute required capacity per resource for the next week's order book.
- Compute available capacity per resource for the next week.
- Identify the resource with the highest required/available ratio.
- That resource is the bottleneck. Schedule around it.
How ERP automates capacity planning
Manual capacity planning - Excel sheets summarising load and capacity - is feasible for plants with under 10 machines and 20-30 active orders. Above that, it cracks.
ERPDrive's capacity-planning module automates:
- Pull live order book and pending production orders.
- Apply BOM and routing to derive required hours per resource.
- Pull resource calendar (shifts, holidays, planned maintenance).
- Apply efficiency factor per resource.
- Produce week-by-week load vs capacity for the next 12 weeks.
- Flag overloaded weeks with recommendations: sub-contract, extra shift, or move customer date.
Frequently Asked Questions
What is the difference between RCCP and finite-capacity scheduling?
RCCP (Rough-Cut Capacity Planning) is a tactical-horizon (1-6 month) check that the production schedule is feasible at the major-resource level using approximate load profiles. Finite-capacity scheduling is an operational-horizon (1-4 week) detailed assignment of specific work orders to specific machines at specific times, respecting all constraints. RCCP identifies overload weeks; finite scheduling produces the actual dispatch sequence.
What is a realistic capacity utilisation target for Indian job shops?
Plan to 70-80% utilisation of nominal capacity, not 100%. Setup time, tool changes, operator-skill mismatches, and rework typically consume 20-30% of calendar-hour capacity in an Indian job shop. Planning to 100% guarantees schedule slippage. AutoTech Components in Coimbatore moved on-time delivery from 71% to 89% just by planning to 70-80% in their cell-A.
How do I identify the bottleneck in my factory?
Compute required capacity per resource for the next planning period (week or month) and divide by available capacity. The resource with the highest required/available ratio is your bottleneck. In a job shop the bottleneck shifts with the product mix - one week it might be the VMC, next week the grinding machine. Theory of Constraints says you should schedule around the bottleneck and never let it idle.
Can ERP handle capacity planning for a job shop?
Yes, if the ERP includes a capacity-planning module that supports finite scheduling, sequence-dependent setup times, operator-skill matching, and multi-operation routings. Generic ERPs (accounting-first systems with bolt-on production modules) usually cannot. Purpose-built manufacturing ERPs like ERPDrive handle these constraints natively. Manual capacity planning in Excel is feasible only for plants with under 10 machines and 20-30 active orders.
What is finite-capacity scheduling?
Finite-capacity scheduling assigns specific work orders to specific machines at specific times while respecting actual capacity limits (the schedule cannot exceed what each machine can produce). Contrast with infinite-capacity scheduling, which assumes resources have unlimited capacity. Real factories require finite scheduling because resources are bounded. The scheduler must handle sequence-dependent setups, operator skills, tool availability, and routing constraints.
How often should capacity planning run?
RCCP runs weekly to support sales-operations alignment for the next 12 weeks. Finite-capacity scheduling runs daily for the next 1-4 weeks. Strategic capacity decisions (new machine, second shift) run on an as-needed basis triggered by sustained RCCP overload signals over 3-6 months.
Sources & References
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